Given your diverse investment portfolio that includes both government and private projects, how does AEPCO balance its focus between utility-scale projects that leave a national impact and C&I projects characterized by flexibility and speed of execution? What are the key factors in the MENA region that determine your preference for one model over the other?
Alternative Energy Projects Co. (AEPCO) adopts a balanced strategy based on two main pillars. The first targets reducing the carbon footprint of the private sector and supporting its transition toward Net Zero targets by 2050. In this path, we place great emphasis on raising awareness of available options, whether through implementing solar plants in accordance with local regulations, improving energy efficiency, or providing transport electrification solutions. Although C&I contracts require more intensive negotiation efforts, they are characterized by accelerated growth and significant diversity across the Gulf and the Arab world.
The second pillar focuses on large utility scale projects. Since our inception, we have been keen on building strategic partnerships with industry leaders, such as the Saudi ACWA, to participate in major tenders. Despite the intense competitiveness and narrow profit margins in this scope, these projects represent multiples of the private sector’s project size and serve as the fundamental cornerstone for reducing emissions at the national level and achieving the energy goals of nations.
The decisive factor in our preference and direction within the MENA region primarily depends on the maturity of laws and regulations in the respective country and the nature of the client’s operational needs. What truly distinguishes AEPCO is our dual expertise required to operate in both sectors (Utility and C&I) under one roof—a competitive mix that is rarely found in other companies in the region.
From a financial perspective, how does the risk-return profile differ between C&I and utility scale projects in the region? While utility projects offer long-term Power Purchase Agreements that ensure stable cash flows, the C&I sector usually offers higher profit margins and a faster Return on Investment. In your opinion, which model enjoys greater flexibility and profitability under the current economic climate and interest rate fluctuations?
Utility scale projects differ fundamentally from C&I projects in terms of size and scope. While government tenders in our region can exceed 2,000 MW per project, private sector projects are usually limited to a few megawatts or tens of megawatts.
From a risk-return perspective, there is a clear contrast in the financial profile of each:
Utility Scale Projects: Characterized by very low payment risks due to being backed by sovereign guarantees from ministries of finance or established Independent Power Producer contractual frameworks, especially with the continuous improvement in the credit ratings of regional countries (particularly GCC countries). However, the main challenge lies in execution risks, as these “Giga-scale” projects require massive financial capabilities and technical expertise.
C&I Projects: The primary risk is concentrated in the creditworthiness of the private off-taker and their ability to commit to long-term payments under lease or PPA contracts, as they lack government guarantees. However, these risks can be mitigated through various payment security mechanisms.
Under the current economic climate, C&I projects remain superior in terms of flexibility and profitability; they offer higher profit margins and Internal Rate of Return compared to utility projects, despite the smaller capital investment compared to large-scale projects that are characterized by stability and continuity.
Utility scale projects often face significant challenges related to grid integration and land availability, whereas the C&I model offers an innovative solution through the concept of Distributed Generation. How do your C&I projects contribute to alleviating grid pressure and enhancing efficiency? What role can AEPCO play in providing consultancy to governments and utilities to modernize their grids and accommodate both project models?
Utility scale projects represent a major logistical and technical challenge. In terms of space, every 1 MW of solar energy requires approximately 10,000 square meters, meaning projects ranging from 1 to 2 GW require vast areas and long-term legal security for land-use rights. Technically, Power Evacuation represents an additional hurdle, as connecting these massive capacities requires major capital investments in building substations and high-voltage transmission lines, which is time-consuming. Nevertheless, these projects remain essential for accelerating national carbon targets.
In contrast, the Distributed Generation model in the C&I sector bypasses these challenges, with its added value lying in several core points:
Peak Load Shaving: Smaller plants contribute to meeting demand directly at the point of consumption, reducing pressure on the national grid, especially during peak times.
Energy Efficiency: Generation at the consumer side results in savings in electrical losses that can exceed 10% efficiency gain that distant centralized plants do not provide.
Strategic Planning: These projects assist production planning departments in utility companies by delaying the need to build costly large power plants to meet demand growth or peak loads.
From here, AEPCO’s vision emerges in providing consultancies that advocate for a balance between these two models. While large plants provide massive production capacity, Distributed Generation provides flexibility and operational efficiency for the grid. This integration is what we believe to be the true future of the energy sector in the region.
Regulatory frameworks for C&I projects, such as Net Metering policies, are less mature in the region compared to the legislation governing utility scale projects. In your opinion, what are the most prominent regulatory changes that regional governments should adopt to enable the C&I market to unlock its full potential? How does the current regulatory ambiguity reflect on your investment decisions and growth strategies in this sector?
AEPCO is active in close cooperation with government entities and legislators to accelerate the issuance of stimulating regulatory frameworks for both Utility scale and distributed solar sectors. The Jordanian experience is a leading model and one of the most mature in the region in terms of legal frameworks regulating the C&I sector, making it a reference for neighboring countries seeking to develop legislation to empower the private sector.
Regarding the impact of this ambiguity on our strategies, we give regulatory maturity significant weight when making investment decisions. A developer needs stable, detailed laws that guarantee the protection of investments that typically span 20 to 25 years.
We notice a disparity in the speed of regulatory maturity; while utility-scale projects require more time and effort in drafting contracts and governance due to their link to international financing and global developers to ensure the lowest possible tariff, we find that the stability of C&I laws remains the primary driver for our investment growth in this scope, given the speed of execution and reduction of financing risks it provides.
The renewable energy market in the MENA region is witnessing growing competitiveness with the entry of new global and regional players. In your opinion, what distinguishes AEPCO from its competitors in both utility-scale and C&I projects? Does your competitive advantage lie in your deep regional experience, your innovative financing models, or your ability to execute projects efficiently within complex operating environments?
The rapid growth of the renewable energy sector in our region has attracted major international developers, especially in utility-scale projects in GCC countries, which have become a global model in achieving the lowest electricity tariffs and attracting international finance. However, AEPCO’s competitive advantage stands out clearly when compared to these players in several aspects:
Integration of Dual Expertise: We are distinguished by having a team that combines expertise in large utility-scale projects and C&I projects under one roof—a mix lacked by most competitors who usually specialize in one path over the other.
Local Leadership in the Private Sector: While it is easy for an international developer to enter major government tenders, they face difficulty competing with a local developer in the C&I sector. This sector requires precise knowledge of local market details, contractor networks, and direct relationships with off-takers—areas where we excel thanks to our established presence on the ground.
Ability to Work in Complex Environments: Thanks to our close local partnerships, we possess sufficient flexibility to execute projects in geographical and operational areas that may be difficult for international companies to operate in.
Innovative Financing Solutions: As part of the KIPCO Group, we rely on a long-standing legacy in the business and banking sectors, which grants us the ability to provide innovative and sustainable financing solutions that ensure long-term investment viability.
AEPCO does not just provide energy solutions; it offers a unique blend of global knowledge of technical and financial frameworks and deep local experience with regional market requirements.
With rapid advancements in energy storage technologies, smart grids, and Virtual Power Plants (VPPs), do you expect the boundaries between C&I and utility-scale projects to gradually fade? From your perspective, how can multiple C&I assets and projects be aggregated to operate as an integrated unit capable of providing services to the grid at a level comparable to utility-scale projects? What strategy is AEPCO adopting to prepare for and lead this future transformation in the region’s markets?
Looking at the future of energy, we find that the boundaries between generation and consumption are on the verge of vanishing. Every consumer will transform into a “Prosumer” through solar, wind, or green hydrogen fuel cell technologies. This shift forces utility companies to adopt business models that move away from the traditional monopoly pattern (generation, transmission, distribution, billing) in favor of smart grids relying on advanced technology and Artificial Intelligence.
The transformation strategy we believe in at AEPCO is based on three main pillars:
Virtual Power Plants (VPP): Aggregating distributed assets (such as residential and commercial rooftops) to form massive generation units capable of competing in open energy markets, breaking the monopoly of traditional utilities and benefiting the end consumer.
Energy Storage Revolution: The continuous decline in battery prices is transforming renewable energy from variable sources dependent on weather conditions into fully dispatchable sources, much like fossil-fuel plants. This integration will enable us to increase the share of clean energy in grids to over 50% in the near term.
Microgrids (Flexibility and Speed): Unlike major utility projects that require years for planning and execution with massive capital costs, Microgrids are characterized by their ability to keep pace with consumption growth with high flexibility. Generation and storage occur directly at the point of need (Behind-the-Meter), whether on building rooftops or even in logistical spaces like parking lots.
At AEPCO, we expect exponential growth for these smart grids and microgrids in our region, driven by the economic viability of batteries and their ability to address peak load challenges with efficiency that surpasses traditional centralized solutions.
